Market Overview: S&P 500 Emini Futures
The S&P 500 Emini futures bulls got a weekly second leg up from higher low MTR (Nov 3). This week was a big bull bar closing near the high, breaking far above October high. Bulls need to create a follow-through bull bar to increase the odds of a retest of the September 12 high and the major bear trend line. The bears hope that the current pullback is simply forming a double top bear flag (Sept 12) and a lower high.
S&P500 Emini futures
The Weekly S&P 500 Emini chart
- This week’s Emini candlestick was a big bull bar closing near the high and above the 20-week exponential moving average.
- Last week, we said if the retest of the October high is weak, we will likely see sellers return.
- This week was a strong retest and breakout above October high.
- The bulls got a reversal higher from a wedge bottom (Feb 24, June 17 and Oct 13) with a nested wedge (Sept 6, Sept 30 and Oct 13).
- They then got a second leg sideways to up from a higher low major trend reversal (Nov 3).
- Bulls will need to create a follow-through bull bar next week to increase the odds of a retest of the September 12 high and the major bear trend line.
- The problem with the bull’s case is that the selloff from August was very strong. The sideways to up leg may lead to a lower high. For now, this remains true.
- However, if the bulls can create strong consecutive bull bars closing near their highs breaking far above the major bear trend line, it could signal the end of the correction.
- The bears got a tight bear channel down testing the June low but failed to get follow-through selling.
- The bears hope that the current pullback is simply forming a double top bear flag (Sept 12) and a lower high.
- They then want a retest of the June low followed by a strong breakout and measured move down to around 3450 or the 3400 Big Round Number which is also the 2020 high.
- Bears see the selloff from January as a broad bear channel. The major bear trend line remains as resistance above.
- This week, they failed to create a follow-through bear bar and the bull bars are becoming bigger and closing near their highs.
- Since this week was a big bull bar closing near its high, it is a good buy signal bar for next week.
- The Emini may gap up on Monday. Small gaps usually close early.
- For now, odds slightly favor the Emini to trade at least a little higher. Traders will see if the bulls can get a follow-through bull bar.
- If they do, the odds of a retest of September 12 high and the major bear trend line increase.
The Daily S&P 500 Emini chart
- The Emini traded sideways earlier in the week and broke sharply above October high on Thursday with a follow-through bull bar on Friday.
- Bulls see the strong selloff from August simply as a sell vacuum testing June low within a broad bear channel. A broad bear channel is almost a trading range that is tilted down.
- They got a reversal higher from a lower low major trend reversal with the June low, a wedge bull flag (Feb 24, June 17, and Oct 13) and a nested wedge (Sept 6, Sept 30 and Oct 13).
- This week, the bulls got the second leg sideways to up from a higher low major trend reversal (Nov 3).
- The problem with the bull’s case is that the selloff from August 16 was very strong. Sideways to up pullbacks may lead to a lower high. For now, this remains true.
- However, if the bulls start creating consecutive bull bars closing near their highs (strong spike up) and trading far above the major bear trend line, odds will swing in favor of higher prices.
- The next targets for the bulls are the September 12 high and the major bear trend line.
- The bears want a strong breakout below the June low followed by a measured move down to 3450 or slightly lower around the 3400 big round number which is also 2020 high.
- They see the current move as a developing wedge bear flag (Oct 18, Nov 1 and Nov 11).
- They want a reversal lower from a double top bear flag with the September 12 high and a retest of the October low.
- The bears see the selloff from January as a broad bear channel. If the Emini trades higher, the bears want a reversal from a lower high around the major bear trend line.
- This week, the bears did not get much follow-through selling following last week’s pullback.
- For now, the odds slightly favor sideways to up.
- The September 12 high and the major bear trendline are within the bull’s reach.
- The bulls need to break far above the major bear trend line to convince traders that the selloff from January has ended.
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